Tips for setting a child’s allowance
Q. How can I decide the right amount to give as an allowance to my kids? They are 13, 9 and 7.
A. This is a question that all parents have pondered, and there is no one correct answer.
One strategy is decide what each chore is worth, said Bill Connington of Connington Wealth Management in Paramus.
Then, he said, let your children know what’s expected of them.
“If they have to be told to do it, then there is no payment for what is done,” Connington said.
He would also establish rules that say they need to put some of their allowance away in a bank account so that they learn the value of saving money.
“You could also have them set up goals to save the money for, so that they can see how saving is a better way to purchase items then credit,” Connington said.
You could also offer matching funds. For every dollar they set aside for the future, just like your employer does for your 401(k) plan, you could give them a percentage on every dollar.
Other money lessons could include you taxing their allowance so they understand what happens to paychecks in the real world.
Other families give kids a set amount every week if they do their chore list. Deciding the appropriate amount really depends on the level of work the child does and what you think is a realistic budget for what the child should be spending.
Still others don’t give an allowance at all, but expect children to perform certain acts just because they’re a member of the family and they have to share the responsibility of maintaining the household. Older children are usually expected to have more responsibilities than younger ones.
Then when the child asks for money, if the child has been holding up his end of the bargain with chores, the parent gives a reasonable amount. Again, what’s reasonable should depend on your family’s situation and what you think is appropriate.
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Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.